The disclosure of executive directors' pay is good for society. Rather than being a cause for hand-wringing and envy, the Guardian pay survey's revelations of what our best managers can earn from running the UK's biggest listed companies should encourage others to follow in their footsteps. The survey found that directors' pay at the 100 largest such firms has risen by 37%, with the average chief executive receiving £2.9m, including salary, benefits, bonuses and gains from share incentive schemes. These figures send an important message to able and aspirational young people.

This evidence of the amounts that successful managers can earn from a career in business provides an attractive alternative to role models in music, sport, literature and fashion. How would celebrities fare if they were slotted into the table? On the basis of the Forbes lists figures, Elton John's earnings of £27m would put him at number one, ahead of Barclays Bob Diamond with £23m; David Beckham would come in fourth and Kate Moss at 34th.

The companies surveyed employ almost 5 million people and pay them a total of £618bn, an average of £29,087 for each employee, close to the UK's national average of £26,400. The near-hundredfold gap between pay at the very top and average earnings is often cited as a danger signal. The fear is that the wider the gap becomes, the greater the risk of creating an underclass and social incohesion. But it is easy to exaggerate the importance of this gap.

There is only one chief executive for each of the FTSE 100 companies and 531 executive directors in total. Between them and the average employee are numerous roles and career paths that offer considerable opportunities and much more than average earnings for many hundreds of thousands of people.

What people are paid the most for says a lot about what we value. It's no accident that financial services firms feature so prominently in the top 10 of average earnings and directors' pay. Compare Drax, the power station operator, which generates a profit of £942,000 for each of its 619 employees, with 3i's £1m a head of realised profits from its 765 employees. On average, Drax's people earn £56,000 for generating electricity while 3i's earn more than £200,000 a head for generating wealth. It is intriguing that levels of pay for managing large plant and machinery should be so much lower than those for applying a well-established financial services franchise.

It is also worth looking at which companies are no longer in the pay survey. Few of Britain's listed companies are now beyond the reach of private equity. And when our largest companies are no longer in public ownership, they are no longer subject to the close scrutiny that enables us to see exactly what their leaders earn. In the face of media attention, listed company disclosure requirements and the strictures of corporate governance, it must seem very appealing indeed to draw a veil over a large company's affairs and deal with issues such as pay and decision-making in private. Maybe the smartest guys in the room are now making their money in private equity rather than by managing large listed companies.

Whatever one's view on directors' pay, information about the corporate governance of the largest companies operating in Britain and their visibility and transparency is a critical social issue. These organisations employ many people and wield enormous influence. Our high streets, our standard of living and the choices we are able to make as consumers are shaped by the directors of our biggest companies.

Last year Marks & Spencer recorded group sales of £7.8bn. That's considerably more than the gross domestic product of many countries. BP had total revenues of $266bn (£132bn) in 2006. If BP was a country, it would rank 27th in the World Bank's 2006 GDP league table, between Denmark and South Africa, above members of the European Union like Greece, Ireland and Portugal. We rightly feel uncomfortable with the idea of states being run as dictatorships; we'd prefer them to be run along open, democratic and meritocratic lines. Shouldn't similar aspirations continue to apply to our largest corporations?

How companies of this scale are managed and how much they pay their directors are important social issues. The significant move towards more openness and accountability in UK-listed companies is more than a good thing. If the most talented managers believe they can do better elsewhere, whether that be abroad or in a private equity firm, they will leave listed UK plc bereft of talent.

Listed companies need to be competitive in executive pay, not just with each other but with the full range of alternatives available to the most talented people. The best managers of the best FTSE 100 companies will continue to earn more, and we should guard against ill-considered condemnations when the scale of their pay is published.

· Peter Newhouse is an independent consultant on pay and performance management and founder of the Reward Technology Forum, which conducted the boardroom pay survey for the Guardian.